Tuesday, November 15, 2016

NVIDIA: Don't Buy the Stock For The Autonomous Car Stuff (or virtual reality) NVDA; TSLA; IBM

The stock is up $2.21 (+2.64%) at $85.85.
Yesterday the usually very reliable Investor's Business Daily headlined a story "Nvidia Upgraded On Growth In Car, Cloud, Virtual Reality Fields". As we say in our standard intro to the stock:
Before we go any further, our NVIDIA boilerplate:  
We make very few calls on individual names on the blog but this one is special. 
They are positioned to be the brains in autonomous vehicles, they will drive virtual reality should it ever catch on, the current businesses include gaming graphics, deep learning/artificial intelligence, and supercharging the world's fastest supercomputers including what will be the world's fastest at Oak Ridge next year.
Not just another pretty face.  
Or food delivery app.
That's me, quoting myself (NVIDIA Sets New All Time High On Pretty Good Numbers, "Sweeping Artificial Intelligence Adoption" (NVDA))
NVDA's most headline-grabbing deal in autonomous vehicles is with Tesla about which we said:
Last week when Tesla formalized their relationship with NVIDIA, something we had already assumed into NVDA's stock price when TSLA parted ways with MobilEye, there was happiness among the longs that we didn't join...
There is a greater than trivial chance that Tesla won't be able to raise the money they need, variously estimated at 3, 6 and 12 billion dollars,* to achieve Elon's plan for world domination, or at least not at the time he will need it. If TSLA management is smart they would come to the market as soon as the SolarCity deal is done and grab, at minimum, the $3 billion while the window is open.

As to virtual reality it is still on the come and has been for twenty years. If it turns into an actual business for someone it will be gravy for NVIDIA but it's not there yet.

Here's the Investor's Daily story followed by something that doesn't get enough attention, NVLink:
Graphics chipmaker Nvida (NVDA) was upgraded to a buy at Needham, based principally on its strength in automotive, data center technology and virtual reality systems. 
Needham analyst Rajvindra Gill set a price target of 100 on Nvidia stock.Nvidia skyrocketed to a record high Friday after crushing third-quarter estimates late Thursday and guiding higher for the current quarter. Nvidia stock spiked 30% to close at 87.97 
Nvidia stock, though, slumped 4.9% to 83.64 in the stock market today. 
IBD'S TAKE: Nvidia stock has a best-possible IBD Composite Rating of 99. It is No. 1 on the IBD 50 list of top performing stocks. 
In the automotive field, Nvidia is providing chips used for the development of self-driving vehicles, with customers that include Tesla Motors (TSLA). Last month, Tesla announced that all vehicles now in production will have full self-driving hardware. Tesla has come under criticism for its Autopilot software, especially after a fatal Model S crash in Florida, in May. 
Also benefiting Nvidia is the proliferation of systems incorporating artificial intelligence and machine learning in data center applications....MORE
As we noted a year ago:
In addition Nvidia has very fast connectors they call NVLink.
Using a hybrid combination of IBM Central Processing Units (CPU's) and Nvidia's GPU's, all hooked together with NVIDIA's NVLink, Oak Ridge National Laboratory is building what will be the world's fastest supercomputer when it debuts in 2018.
As your kid plays Grand Theft Auto.... 
Here's the latest, from VentureBeat, Nov. 14:

IBM and Nvidia team up to create deep learning hardware
Deep learning continues to gather steam in corporate computing, and IBM and Nvidia are teaming up to help accelerate the foundation behind artificial intelligence breakthroughs. The two companies are collaborating on a deep learning solution that melds technology from both companies in a bid to speed up the process of training computers to think and learn more like humans do.
A new software toolkit available today called IBM PowerAI is designed to run on the recently announced IBM server built for artificial intelligence that features Nvidia NVLink technology optimized for IBM’s Power Architecture.
The hardware-software solution provides more than two times the performance of comparable servers with four graphics processing units (GPUs) running AlexNet with Caffe. The same four-GPU Power-based configuration running AlexNet with BVLC Caffe can also outperform 8-M40 GPU-based x86 configurations, making it the world’s fastest commercially available enterprise systems platform on two versions of a key deep learning framework, the companies said....MORE
Here's the IBM press release:
IBM and NVIDIA Team Up on World’s Fastest Deep Learning Enterprise Solution 
The deep learning/artificial intelligence stuff is happening right now.

We have dozens and dozens of posts on NVIDIA, artificial intelligence, deep learning etc. Use the 'search blog' box if interested.

*"Wait, Tesla Motors Might Need to Raise $12 Billion?!?!" (TSLA; SCTY)